When you are running a business, you are in charge of a range of people. You’re in charge of your employees who you paid to be there and working for you. You’re in charge of your. Outsourced entities such as IT and marketing. You’re also in charge of which suppliers you decide to use.
Now, while you are not in charge of the suppliers themselves, you have to be able to manage those relationships, and successful supplier relationships require a lot more than just placing an order and hope it arrives on time. There has to be two way communication happening here with recommendations, incentives and more. Suppliers need to know that you’re going to be a reliable payee and you need to know that your supplier is going to give you the goods. Whether you are looking at metal fabrication suppliers or product packaging suppliers, you need to trust the people you choose. There is a lot that you can do to manage your suppliers properly so that your contracts are going to be smoothly executed. Some of the best tips to manage suppliers are listed for you below.
- Start researching the costs and the value of the supply chain itself. As a business leader, you need to have an in-depth understanding of all the costs that are involved in the supply chain, from the raw materials used through to the service or the end product. You also need to understand the value that is provided by your suppliers. Whether it’s your manufacturing suppliers for metal fabrication or you are looking for new equipment, suppliers cannot be evaluated properly unless you understand the cost and the value of the supply chain from start to finish.
- Remember that supplier strategies are not just a one way street. It’s important that you are not the sort of business leader who focuses on what other suppliers can do for you. Rather, you also have to focus on what you could be doing for your suppliers. You have to be the kind of customer that your suppliers want so that you can get access to discounts and lower costs. This has to be a partnership, not just a boss and employee relationship.
- Maintain your accountability. If you want to be somebody who is well respected by their suppliers, then you need to make sure that you are accepting any accountability for late invoices or mistakes when planning sufficient orders. If every single order that you put through requires emergency handling, then something is going wrong and you are doing something incorrect here. You need to make sure that you are giving your supplies adequate time to fulfill your orders, and that means adhering to their particular timelines, not doing things on your own timeline.
- Make sure you have a contract. It’s so important that you go beyond the handshake when it comes to managing your suppliers. You need to have a contract in place so that you know exactly what should be happening and when. There should be appropriate timelines for service and there should be appropriate timelines for payment and you are also in charge of that.
- Align both incentives and penalties. You need your suppliers to deliver on time, but equally you need to be paying for things on time. It’s very natural to worry about any worst case scenarios, such as shipments not arriving when they should and your plant grinding to a halt, but that’s where planning comes in. The extra value that’s created when your assets and products are utilized is important to improve the value proposition for both parties here.
- Ensure that you are sharing information. If there is a change in the amount of product you need or the equipment that you need. You need to be communicating this as early as possible so that mistakes aren’t made. You have the power to avoid any supply chain mistakes, and by being communicative and on the ball, you’ll be able to share information constantly with the right confidentiality to the right people.
- Plan for the emergency. There should always be a backup plan for everyday exceptions and emergencies because emergencies do and can occur. Agreeing on how those emergencies are handled ahead of time will help you to analyze exactly why they occur in the first place. This will help you to reduce the number of emergencies that occur and allow you to get ahead.
- Make sure that you are regularly meeting. You need to be able to touch base with your suppliers on a regular basis so that you can ensure A mutually assured relationship. Relationship meetings should focus on any critical issues and areas for improvement on both sides.